San Diego Settles Pension Litigation

June 8, 2004 (PLANSPONSOR.com) - San Diego's public
pension board has okayed a lawsuit settlement pact with
retirees after members voted to clear some trustees of
conflicts of interest that might violate California
law.

The settlement was discussed in closed session and
passed 9 to 3, with one member absent, according to
retirement administrator Lawrence Grissom, the San Diego
Union Tribune reported. The matter was slated for a
closed session City Council meeting Tuesday and then will
go to a judge July 7.

The settled lawsuit alleged that a November 18, 2002
vote by Mayor Dick Murphy and a City Council majority to
underfund the pension was illegal and alleged conflicts of
interest on the retirement board (See
San Diego Approves
Pension Reform Committee
). Under the settlement, the city will pump a record $130
million into the system in the fiscal year beginning July
1, and in subsequent years will pay what the system’s
actuary says is owed.
The retirement system has a $1.15 billion deficit.

At issue in the conflict of interest vote was
whether members of the board who are city employees are
permitted to vote on matters – such as benefit increases
– that will enrich them.

The California Government Code prohibits city
employees from having a financial interest in contracts
they vote on. Monday, the retirement board approved a
resolution that said the City Charter, which establishes
the makeup of the board, “abrogates,” or makes null, this
section of state law. The reasoning, according to the
newspaper: this state law does not apply when the public
officials act in a “dual capacity” as public employees
and pension trustees.

Of 13 members of the San Diego City Employees
Retirement System board, eight are city employees and a
ninth is a retired city worker.